As the industry struggles to cover the costs of new EU rules on reducing emissions, Reuters reports.

For years, airlines have warned that regulations requiring them to use more expensive sustainable fuel for planes could increase costs.

Ticket prices have already risen in recent years during the post-COVID travel boom, raising concerns that further increases could deter travelers from flying.

Fares will rise between 1 euro and 72 euros, depending on the type of ticket, on all flights departing from EU countries, the UK, Norway and Switzerland, the German airline group announced.

Some of the increases are effective from June 26 for departures starting January 1, 2025.

The fee "will cover part of the continuously increasing additional costs due to environmental requirements", such as sustainable aviation fuel (SAF) made from bio-based materials, considered crucial for making flying less polluting.

Lufthansa's shares hit a low during the day after the news, but later recovered.

Aviation is responsible for about 2% of global emissions, but is considered one of the hardest sectors to decarbonize because flight fuel cannot be easily replaced with other types of energy.

European regulators have introduced rules requiring fuel suppliers to ensure that 2% of the fuel at EU airports is SAF by 2025, increasing to 6% by 2030 and 70% by 2050, with many arguing these measures will raise sector costs.

"I think it's logical to assume that other airlines will follow Lufthansa's lead as they try to pass on the rising costs of EU environmental regulations", said Dudley Shanley, an analyst at Goodbody.

Air France-KLM imposed a SAF contribution fee in January 2022, adding up to 12 euros to business fares and up to 4 euros to economy fares at the time.

It is now considering measures similar to Lufthansa, said a person familiar with the matter, indicating a potentially higher fee.

"We have a SAF contribution in place, applicable to all flights (not only departing from Europe) to transparently reflect the additional cost of incorporating sustainable aviation fuel", an Air France-KLM spokesperson said in an emailed statement.

British carrier easyJet, which has focused much of its environmental strategy on reducing carbon emissions using hydrogen technology, said it does not plan to follow Lufthansa's example.

"We do not apply old-fashioned transport surcharges and have no intention of doing so", an easyJet spokesperson told Reuters.

Wizz Air also said it would avoid additional surcharges, adding in a statement that "to avoid burdening passengers with higher costs, we urge governments to provide incentives to enable the aviation industry to meet its environmental goals more efficiently".

In the United States, both United Airlines and Southwest said they do not have an environmental surcharge.

Cost warnings

British Airways owner IAG and Ryanair did not respond to a Reuters request for comment on whether they would introduce similar measures for Lufthansa.

Lufthansa CEO Carsten Spohr warned last year that EU targets would be hard to meet and suggested that higher costs would be passed on to customers.

The price increase, which the airline called the "Environmental Cost Surcharge", will cover part of these costs for 2025 and will apply to all Lufthansa group airlines except Eurowings tickets sold directly by the company, a spokesperson said.

For short and medium-haul flights, fares will increase by up to 5 euros in economy class and 7 euros in business class. For long-haul flights, costs will rise between 18 and 36 euros for business fares and up to 72 euros for first-class fares from 2025, Lufthansa confirmed to Reuters.

A spokesperson said this measure was not related to Lufthansa's high labor costs following this year's strikes, which prompted the airline to issue a profit warning before first-quarter results. He added that additional costs are not expected to increase further for now.